The California Legislature just last week introduced another bill that would expand equal pay protections to race and ethnicity. If passed, this law could affect employers as much as, if not more than, the Fair Pay Act.
On the heels of enacting the Fair Pay Act, which is largely considered the strictest gender pay equity law in the nation, California’s Legislature recently introduced SB 1063, the Wage Equality Act of 2016. As many employers in California are already aware, the Fair Pay Act dramatically broadened the scope of existing law by, among other things, prohibiting pay discrepancies between employees of the opposite sex for “substantially similar work,” regardless of job description or location unless the employer can demonstrate certain legitimate business reasons for the discrepancy. Further, the Fair Pay Act added protections for employees to discuss their wages for the purpose of enforcing their rights. The Wage Equality Act seeks to similarly extend California’s equal pay protections to prohibit pay discrepancies between employees of different races or ethnicities. Indeed, the language of the proposed legislation is nearly identical to the language in the Fair Pay Act.
Although it is not yet certain whether the Wage Equality Act will pass, introduction of the bill clearly indicates the Legislature’s intent to expand equal pay protections. This, coupled with the Equal Employment Opportunity Commission’s recent announcement that it plans to require certain large employers to report pay data in addition to already-collected information regarding race, ethnicity, sex, and job category, means that employers can be certain that stricter laws, increased scrutiny, and aggressive enforcement are on the horizon regarding pay discrimination.
With the amount of publicity that the Fair Pay Act received and the Wage Equality Act is likely to receive, California employers can anticipate substantial litigation, including potential class actions related to pay discrimination. Employers should take proactive steps to ensure compliance with existing and proposed equal pay laws by: 1) carefully scrutinizing employees’ job descriptions, actual duties performed, and rates of pay to determine any potential pay discrepancies related to gender, race, or ethnicity; 2) determining whether any such discrepancies are based on legitimate business reasons and, if so, documenting these reasons or, if not, correcting the discrepancies; and 3) updating employee handbooks and other human resources materials to reflect compliance with the Fair Pay Act and, if passed, the Wage Equality Act.
Klinedinst PC will continue to follow the progress of the Wage Equality Act as well as the development of case law related to the Fair Pay Act. Please contact the Klinedinst Employment Litigation and Counseling Group for more information regarding equal pay laws or any other employment matter.